Magic Quadrant for Cloud-Enabled Managed Hosting, Europe

VIEW SUMMARY

Cloud-enabled managed hosting brings cloudlike consumption and provisioning attributes
to the traditional managed hosting market in Europe. This is a new evolution of a
mature market, with a wide variety of vendor offerings and capabilities, so infrastructure
managers must choose with care.

VIEW SUMMARY

Market Definition/Description

The European marketplace consists of 27 member states of the European Union. Each
member state has its own interpretation of the EU rules on data privacy, as well as
separate languages and cultures. The scope of this Magic Quadrant focuses primarily
on the European marketplace, incorporating the top six countries by GDP (Germany,
U.K., France, Italy, Spain and the Netherlands). In each of these countries, customers
prefer their languages to be supported, as well as service providers to have a data
center presence in their countries. Some providers in this Magic Quadrant take the
approach of having data centers in each of the major hubs within Western Europe, while
others prefer a more decentralized, global delivery approach. This Magic Quadrant
focuses on multinational as well as domestic service providers that have achieved
a significant market share in one or more European countries.

Cloud-enabled managed hosting is a standardized, productized hosting offering that
combines a cloud-enabled system infrastructure (CESI) platform — consisting of a pool
of compute, network and storage hardware — with cloud management platform software
to facilitate self-service and rapid provisioning, with managed services. The infrastructure
platform should be located in a service provider's data center, and requires the use
of a standardized deployment across all service provider customers and leverages a
single codebase. At minimum, a service provider must supply server OS management services,
including guest OS instances if virtualization is used. The provider must also supply
other managed and professional services relating to the deployment and operation of
the infrastructure, such as security services, backup, load balancing, and optional
application management for database and middleware. All services should be available
to customers with the option to take some or all.

Cloud-enabled managed hosting has limited customization and is sold on a stand-alone
basis, with no requirement to bundle it with other services, such as application development,
application maintenance, database administration and data center outsourcing (DCO)
services.

Customers of cloud-enabled managed hosting must be able to access a self-service interface
after initial installation, although it may be different from the platform interfaces
used internally by the provider. A service provider can potentially intervene in the
self-service workflow to manually approve, deny or alter the customer's requests —
as long as the provisioning requested is fulfilled in a fully automated manner thereafter.
Managed services (such as OS backups, patching and monitoring) must be available to
the customer — preferably monthly or daily, but, at a maximum, no longer than the
commitment term for the underlying compute resources.

Although this Magic Quadrant focuses on the enterprise-class, cloud-enabled managed
hosting market, offerings and revenue presented on more traditional, dedicated server
infrastructure have been included to reflect the emerging nature of the cloud approach
in Europe, which is some two years behind North America in adoption. Such delivery
models include:

Multitenant, provider premises: Compute, storage and networking hardware is shared among many customers, and is housed
in the service provider's facilities and fully managed by the provider. This is the
most common use case, and also encompasses cloud infrastructure as a service (IaaS)
offerings where the provider offers management of guest OS instances.

Single-tenant, provider premises: Compute and storage hardware is dedicated to one customer (versus used by many customers),
and is housed in the service provider's facilities.

In addition to server OS management, optional managed and professional services related
to infrastructure operations may be offered, such as:

Management of infrastructure software at the middleware or persistence layer, such
as Web server software, application servers and database servers

Management of storage, including backup and recovery

Management of host-based and network-based security functions

Management of network devices, such as application delivery controllers

Cloud-enabled managed hosting services must be available to customers with shorter-term
commitments measured in months versus traditional managed hosting measured in years.
While customers may opt for longer-term contracts (one to three years) in order to
secure greater overall discounts, this is solely at the customers' discretion. Ultimately,
cloud-enabled managed hosting must afford customers the ability to change the amount
of capacity in use without any contract additions or modifications.

Use Cases Covered by This Evaluation

This Magic Quadrant focuses on the following common use cases, independent of the
type or types of infrastructure used to serve these workloads:

E-business hosting for digital marketing websites, e-commerce websites, SaaS, social websites and similar
modern online properties and applications. These workloads are often complex, and
are associated with a high rate of change in systems and application infrastructure.

Web-based business application hosting for corporate intranets and Web-based applications delivered to users primarily within
the enterprise. The applications may be commercial software or in-house-developed
applications; workloads are often relatively static, and do not have a high rate of
change.

Enterprise application managed hosting for the infrastructure underlying large commercial software applications, such as
those of Oracle and SAP. These workloads are often complex, with individual requirements,
and require specialized knowledge to operate optimally, but do not have a high rate
of change.

All three use cases are typically tactical sourcing decisions that center around one
application or a single group of closely related applications (such as everything
associated with an enterprise's video portal). They are typically best-served by a
best-of-breed provider that has strong operational expertise with similar solutions.
However, many customers expand their use of hosting over time, and the choice of a
provider may become a strategic decision for a customer.

In the cloud-enabled managed hosting market, it is difficult to find a provider that
excels in all the areas mentioned above, as well as in certain countries within the
EU as mentioned previously; providers may be leaders in some delivery areas, but may
lag behind in others. Additionally, smaller providers may do one thing extraordinarily
well, but may not have a comprehensive set of services or the geographic reach that
enables them to address a broad array of use cases. As a result, it is important to
match your use case with a vendor that excels in meeting your particular functional
and geographic needs.

It is also crucial to note that this Magic Quadrant shows the overall position of
a vendor in the cloud-enabled managed hosting and traditional managed hosting markets
specifically, and does not consider a provider's strength in other adjacent delivery
areas in IT services. Therefore, it is crucial to look beyond just the placement of
the vendors on this Magic Quadrant during your evaluation and selection, as your individual
needs may be best-serviced by vendors in the Leaders quadrant, as well as by the Niche
Players, especially if you have an unusual need.

Magic Quadrant

Figure 1. Magic Quadrant for Cloud-Enabled Managed Hosting, Europe

Source: Gartner (July 2014)

Vendor Strengths and Cautions

AT&T

AT&T is a large global telecommunications provider headquartered in Dallas, Texas,
which operates data centers in North America, South America, Europe and Asia. The
vendor offers cloud-enabled managed hosting on a VMware-based platform, and can also
provide data center colocation services as well as traditional managed hosting. AT&T
can support customers in English, and can provide managed services for Linux, Windows,
Solaris, HP-UX and AIX OSs (although Solaris, HP-UX and AIX support exists outside
of AT&T's cloud-enabled managed hosting offering). AT&T has a data center presence
in the U.K., the Netherlands, France and Germany, with sales offices throughout Western
Europe and Eastern Europe.

Strengths

AT&T has a long history in the managed hosting space, and a broad range of experience
in managing highly complex e-business infrastructures, especially in the area of e-commerce.

The vendor's additional lines of business — namely, its telecommunications business,
including mobility, managed security services, and enterprise application outsourcing
— allow it to build comprehensive solution sets for customers looking for a more comprehensive
outsourcing model than just hosting.

Through the vendor's NetBond capability, customers with AT&T VPNs can easily extend
their Multiprotocol Label Switching (MPLS) environment directly into AT&T's cloud
computing environment, or into those of other providers within AT&T's partner ecosystem.

Cautions

In the fast-paced market of cloud infrastructure services, AT&T's level of investment
and platform advancement has generally underperformed its peers in the marketplace
in market share and revenue.

The vendor caters to multinational enterprises, especially for customers headquartered
in North America. In Europe, AT&T sells its managed hosting services through its international
sales force; although these customers can build on the relationships established around
the communications and network services that AT&T delivers, they have less of a focus
on managed hosting.

Despite providing managed hosting for some large customers in various industries in
Europe, AT&T continues to be perceived more as a networking player than as a hosting
or managed services provider.

Attenda

Attenda is a U.K.-based managed hosting and cloud service provider that focuses on
running critical business applications. Its approach as a business outcome service
allows it to offer highly customized services based on its own methodology and product
set, yet tied to client business success. The vendor offers hosting of e-business
and e-commerce sites, and business applications from SAP, Oracle and Microsoft. Its
customer base includes midsize and large companies that share Attenda's focus on the
U.K. market, which is one of the largest in Europe.

Strengths

Attenda takes a high-touch approach to managed hosting, with dedicated teams and individuals
assigned to establish direct relationships with customers. This leads to customers
who are generally enthusiastic about the offering, and who describe the relationship
with Attenda as a partnership more than a formal contractual relationship.

Apart from hosting business-critical, custom-made and Web-facing systems (such as
hotel reservation and e-commerce sites), Attenda also hosts the back-end SAP systems
for many of its customers, and can — in cooperation with a consulting partner — deliver
a subscription-based SAP Business All-in-One offering.

The vendor's customized approach allows it to be very flexible to individual business
requirements, with the ability to use resources from multiple third parties for areas
such as specialist applications and commoditized IaaS.

Cautions

Attenda is growing rapidly, which can lead to some resourcing challenges, such as
clients reporting occasional resource problems for popular areas such as SAP-related
services.

The high-touch model, although highly appreciated by customers, can prove more difficult
in terms of keeping up with market growth than more-productized (off-the-shelf)-type
offerings.

Attenda has a presence mainly in the U.K., with its portals and support being solely
in English. Wider European support is limited to a small presence in a Frankfurt data
center.

Attenda's customized approach doesn't allow complete automation, and thus does not
allow it to offer the discounted prices being offered by other service providers.

Gartner clients have expressed concern, on occasion, with Attenda's sales capability,
reporting that some initial engagements are not as impressive as those of its competitors.

BT Global Services

BT Global Services, part of BT Group, is a global provider of managed network, communications
and IT services. Within BT Global Services, the BT Compute unit delivers colocation,
managed hosting and cloud services, with a strong focus on meeting the specific needs
of vertical industries. It competes by targeting BT's existing networking, communications,
security and contact center customers, and Europe's top 5,000 businesses with service
requirements stretching beyond Europe. In past years, it has aggressively built out
its international cloud delivery capabilities, which are now available in 16 countries
across four continents.

Strengths

BT Global Services has made strong investments and has expanded cloud delivery capabilities
in 11 new countries within the past 12 months. Local sales and support teams can now
deliver services from seven data center locations in Europe and 10 locations in other
global regions. Although continued investments will be needed (for example, in additional
dual-site locations), this puts BT in a good position to meet global requirements
with regard to latency or local data sovereignty requirements.

Having seen successful uptake of its specific solutions in vertical industries such
as life sciences, the vendor continues to build out specific propositions for a number
of other verticals, such as global logistics, global banking and financial markets,
and retail industries. This approach is putting it in a good position to fend off
the risk of commoditization of infrastructure services.

The vendor's services are underpinned by a standardization-oriented approach, supported
through a single cloud management system, which BT is designing and actively assembling
from standard components.

Cautions

Maintaining a standardization-oriented approach toward cloud-enabled managed hosting
will require strong rigor in terms of service definition and delivery, and in terms
of sales and bid qualification, resisting the strong requests for exceptions likely
to come from large local customers in a given geography.

BT Global Services focuses on its top 5,000 Europe-based customers. Gartner has seen
other clients outside this list receive inconsistent sales support and messaging.
The vendor's pricing is seen as among the highest in the marketplace, with some services
not being sufficiently differentiated to justify the premium.

Although the current approach of offering vertical solutions is paying off for BT
and aligns with the current buying behavior of the market, the vendor needs to make
sure that it can meet the increased price erosion, performance and quality expectations
as the market evolves, and that — despite its own size — it can give customers the
intimacy and attention they expect.

CenturyLink

CenturyLink is a large global telecommunications provider operating data centers in
North America, Europe and the Asia/Pacific region. The vendor offers cloud-enabled
managed hosting on a VMware-based platform, and can also provide data center colocation
services and traditional managed hosting. CenturyLink supports customers in English,
and can provide managed services for Linux, Windows, Solaris, HP-UX and AIX OSs (although
Solaris, HP-UX and AIX support exists outside of the vendor's cloud-enabled managed
hosting offering). CenturyLink has a data center presence in the U.K. and Germany,
with sales offices throughout Western Europe.

Strengths

CenturyLink has historically supported a broad range of infrastructure requirements
for clients, including a wide range of support for database and middleware stacks,
and application support through the vendor's acquisition of the IT outsourcing arm
of Ciber in 2012.

The vendor is adding higher-level platform services into its catalog with the acquisition
of AppFog, and Cloud Foundry deployments on the CenturyLink cloud (in addition to
its multitenant database-as-a-service offering).

CenturyLink has long had a highly comprehensive portal, which covers all the products
that CenturyLink sells (including network services), although it has started to become
dated. The addition of engineering staff from the vendor's acquisition of Tier 3 will
likely improve this over time.

Cautions

Gartner clients continue to report declining customer service levels for CenturyLink.
While mergers typically cause a period of integration challenges, customer service
issues have been reported for longer than can normally be expected.

Multiple acquisitions, followed by launches and the subsequent decommissioning of
services, will likely continue to put an operational strain on the organization in
the near term as it continues to rationalize its overall portfolio strategy and staff
learns to support the new systems.

CenturyLink's rebranding from Savvis has caused a loss of brand equity in the European
market, where CenturyLink is a relatively unknown entity among domestic audiences.

CenturyLink has a limited hosting sales presence across Europe, largely focusing on
the U.K. and Germany.

Claranet

Claranet is a Pan-European network and managed hosting provider with a presence in
multiple countries, including the U.K., France, Germany, and the Iberia and Benelux
regions. It offers hosting, network and application services to midtier companies
from data centers located in the previously mentioned regions.

Strengths

Claranet has introduced agile process teams to complement its ITIL teams, to meet
the increased demand for more flexible hosting of Web-based applications.

The vendor offers fully regionalized business units comprising sales, marketing and
technical support. This is especially attractive to markets that are sensitive to
local sales and technical support.

Claranet is one of the few providers starting to offer loss-of-business clauses on
top of the standard SLAs, bringing it more in line with the IT outsourcers that sit
at the periphery of this market area.

Hosting is becoming a more important part of Claranet's overall portfolio, which enables
its sales force to focus more on and have a better understanding of the managed hosting
business than some of the more network-centric providers.

Cautions

Although one of the few European-headquartered providers with a Pan-European footprint,
Claranet largely caters to different companies and vertical industries in the each
country, resulting in a nonhomogeneous solution portfolio.

The vendor does not offer hosting of standard business applications such as SAP.

Claranet's acquisition-based growth into local markets may present integration challenges
as it seeks to combine the capabilities of recent additions, such as Echiron (Portugal),
NovaData (the Netherlands) and Grita (France), into its already geographically diversified
portfolio.

Claranet does not offer any strong verticalization in comparison to some of the other
providers, leaving its brand name weaker in certain markets.

Colt

Colt is a Pan-European network and IT service provider that provides hosting services
focused on major European countries (the U.K., Germany, France, Spain, Italy, Switzerland
and the Netherlands), with a presence in the U.S. and Asia. Colt is evolving from
a country-focused model to one that is more customer-focused, serviced through direct
(Optimum) and indirect (Ceano) product lines, and supported from shared-service centers
in India and Barcelona.

Strengths

By investing in enterprise application capabilities, Colt is further deepening the
range of requirements it could already address with its network, colocation, hosting
and cloud services.

The vendor is leveraging its infrastructure and Internet Protocol (IP) investments
by serving both direct (enterprise) and indirect (small or midsize business [SMB])
markets through two separate portfolio offerings (Optimum and Ceano), giving it a
larger addressable market.

To further strengthen its growth in IT services, Colt has been putting significant
positioning and sales enablement efforts into segments beyond its established verticals,
such as financials.

The vendor's strong Pan-European presence of both data centers and sales offices puts
it ahead for customers concerned with data sovereignty in individual European countries.

Cautions

There will be increased competition from VMware's vCloud Hybrid Service (vCHS) for
Colt's sizable vCloud Data Centre Service business. Colt is taking a proactive approach
by reselling vCHS with its own value-added services and offering its customers direct
connect access to vCHS in the U.K.; however, these two platforms will not be integrating
any further than at the base networking layer.

Colt's promising early-mover activities in the very new and still unpredictable market
for indirect cloud services with its Ceano portfolio may — besides the described scale
and synergy advantages — compete for resources internally, along with its other portfolio
products.

While ownership of its own network can strengthen Colt's Pan-European hosting proposition,
as a communications service provider, Colt is also impacted by the industrywide decline
in fixed data and voice revenue, for which its significantly growing IT service revenue
may not be able to compensate.

There have been a few cases of negative Gartner customer feedback regarding Colt's
service management in 2014, highlighting the challenges for communications service
providers to be more accommodating and flexible, in comparison with pure-play managed
hosting companies. Colt has reorganized into service lines in order to address this,
although it is too early to tell if this will have the desired impact.

Easynet

Easynet is a Pan-European network provider with six regional data centers that provide
managed hosting solutions. Easynet takes a solution-selling approach for larger businesses,
rather than selling from an existing portfolio, providing a custom design to clients.
Recently, Easynet has launched an on-premises, appliance-based, hybrid cloud service
that combines on-premises compute linked into public IaaS and SaaS providers aimed
at SMBs.

Strengths

Easynet's approach of providing custom network, hosting and value-added services as
part of a solution differentiates it from more-traditional product-driven telecommunications
providers.

The vendor operates on a true Pan-European basis, with data center and sales presences
in eight European countries, resulting in a large list of domestic European organizations
served.

The recent acquisition of Easynet by MDNX Group in December 2013 will allow for investment
in automation tools to provide a faster provisioned service.

Cautions

Easynet's solution approach for its custom hosting service means not a lot of standardization
and, therefore, less automation is present in its services (for example, provisioning
for new standard services is on a multiple-week, lead-time basis, whereas other providers
can offer a considerably faster service). However, through the MDNX acquisition, there
is a strategy to invest in this area.

As with any acquisition, some uncertainties remain behind the strategic direction
of Easynet, with the potential to lose some of the entrepreneurial innovation that
has been present in the vendor's traditional solution approach.

In the past, Easynet has lacked investments in service platforms, unlike many other
providers in this space. Therefore, it is now catching up with the rest of this fast-moving
market.

Fujitsu

Fujitsu is a large diversified technology company. It has many hosting, DCO, and IaaS
and SaaS platforms available to customers to suit different needs. The vendor provides
not only server and storage manufacturing, but also a comprehensive array of managed
services (from platform to application support), along with a newly launched Cloud
Integration Platform.

Strengths

Fujitsu has a long history in IT services and DCO. It has a large global sales force
and has a strong European presence, particularly in Finland, the U.K. and Germany.
This gives it a large existing base of captive customers to which it can sell managed
hosting on top of the traditional DCO services, and it is successful at extending
existing Fujitsu relationships into cloud deals. The vendor has very responsive support
and good account management.

Fujitsu is a global vendor of hardware and software; consequently, it has stronger
support and development skills for many hardware components, when compared with most
other managed hosting providers.

Fujitsu's new Cloud Integration Platform provides a step beyond the traditional monitoring
and management portals offered by other vendors. The integration into legacy workflow
systems starts to bring the true benefits of agility from the CESI model to the entire
organization.

Cautions

Fujitsu's services are normally aimed at larger enterprises, with a focus on fully
managed data center solutions, and are distant from the services that cater to midsize
and small enterprises, which are prevalent in Europe. These enterprises require standardized
and more cost-effective services.

Although efforts are in place to harmonize the product set, Fujitsu has different
approaches to markets in different geographies — from full IT outsourcing provider
in the U.K., to smaller solution provider in Germany and Finland.

Fujitsu's market presence in the major markets of France, Italy and the Netherlands
is weaker in comparison to the U.K. and Germany.

IBM

IBM is a highly diversified global technology company that operates data centers in
North America, Europe, the Asia/Pacific region and Latin America. The vendor offers
cloud-enabled managed hosting on a VMware-based platform, and can provide sales support
in English, Spanish, French, Italian, German, Dutch and Portuguese, although the platform
is offered only in English and French in Europe. IBM can provide managed services
for Linux, Windows and AIX OSs.

Strengths

IBM's Cloud Managed Services (previously called SmartCloud Enterprise+) is a strategic
investment for the vendor, utilized not only for hosting and cloud customers, but
also for DCO customers.

The vendor is the only provider in the market to have integrated IBM Power Systems
servers (System p) into its platform, meeting the needs of customers looking for an
AIX-based solution.

Cautions

The vendor's managed cloud platform utilizes a mediated provisioning process, whereby
customers can request changes using a self-service portal; however, IBM engineers
must review and approve requests for new compute instances, leading to provisioning
times that may be hours or days.

With IBM's acquisition of SoftLayer, the vendor has been broadly labeling the SoftLayer
business as "cloud," when in reality much of the business is simply a dedicated hosting
offering. Customers engaging with IBM should take care to fully understand what the
vendor may propose.

Although IBM has been a notable participant in the OpenStack project, neither its
Cloud Managed Services offering nor the SoftLayer acquisition currently leverages
the OpenStack platform for computing infrastructure. Contributing to and maintaining
three separate cloud management platform codebases can slow down feature development.

Interoute

Interoute is a Pan-European network and compute provider connecting the majority of
Europe's urbanized areas through its largely fiber-based network. It has also recently
rolled out both network and compute infrastructure to North America and Hong Kong,
based on its IaaS node approach. Under its Unified ICT portfolio, it offers colocation,
hosting and cloud services from local data centers in major European countries.

Strengths

By integrating the fiber network interconnecting its data centers with the compute
platforms, Interoute can offer some unique capabilities, such as movement of workloads
and data between its international data centers at no cost.

The vendor has invested in software-defined networking to make reconfiguring the network
(a bottleneck for flexible deployment) faster.

Its Cloudstore initiative offers a wide variety of solutions to be deployed on the
offered infrastructure. For many of these solutions, Interoute offers managed services,
either directly or through partners, such as Unisys. Cloudstore allows users to choose
the geography for deployment of services, giving greater control to those who are
sensitive to data sovereignty.

Cautions

Interoute's strategy is more centered around similar infrastructure requirements (such
as high bandwidth or low latency) than around unique functional characteristics of
vertical industries.

While ownership of its own network can strengthen the vendor's Pan-European hosting
proposition, as a communications service provider, Interoute is also feeling the impact
of the industrywide decline in fixed data revenue on its wholesale business, for which
its significantly growing IT service revenue may not be able to compensate.

NTT Communications

NTT Communications is a large global telecommunications provider with data centers
in North America, as well as in the Asia/Pacific region and Europe. The vendor provides
cloud-enabled managed hosting on a VMware-based platform, as well as data center colocation
services and traditional managed hosting. NTT Communications can support customers
in 11 languages, including English, Spanish, French, Italian, German and Dutch, and
can provide managed services for Linux and Windows OSs.

Strengths

As a leading communications service provider in the Asia/Pacific region, NTT Communications
has a proven track record of operating in the region and can be an ideal choice for
European customers that will have significant infrastructure needs in Asia.

The vendor is using its experience in communications services to quickly integrate
software-defined networking into its cloud and hosting capabilities — allowing customers
to increase or decrease bandwidth on communications links and to change the guaranteed
processing performance of firewalling on-demand via a portal user interface.

NTT Communications' additional lines of business — including its managed security
services — enable the vendor to build broader solution sets for customers needing
a more comprehensive outsourcing model than just hosting.

Cautions

The vendor has been investing in unifying its disparate cloud offerings and service
terms globally, but the underlying platforms still lag behind those of its peers in
terms of technical innovation and common features (such as solid-state drive storage
tiers and user action audit logging).

NTT Communications has started moving toward high-level "business outcome" objectives
in some strategic deals, and away from the technical SLAs typically found in hosting.
Pursuing both approaches can be a challenging strategy to execute well for both types
of these standard and business outcome SLAs.

Rackspace

Rackspace is a large publicly traded managed hosting and cloud IaaS that operates
data centers in North America, as well as in Europe (the U.K.) and the Asia/Pacific
region. The vendor offers cloud-enabled managed hosting on a Xen platform based on
OpenStack, and can also offer traditional managed hosting. Rackspace has sales offices
in the U.K., the Netherlands and Switzerland, and can provide managed services for
Linux and Windows OSs.

Strengths

Rackspace has been a Leader in managed hosting for many years, with many customers
among the European independent software vendor community, and was very early to adopt
a strategy of allowing managed services to be purchased on the same consumptive basis
as Rackspace's IaaS capacity.

The vendor's portal is well-integrated, and provides customers with access to many
managed services, such as backup and restore operations, data encryption, designing
monitoring notification plans, and more.

Cautions

Despite being a Leader in the managed hosting market in Europe, Rackspace has not
deployed infrastructure capacity outside of the U.K. Customers with data residency
requirements or latency concerns in European regions farther away from the U.K. need
to take this into consideration.

Rackspace is still rationalizing its global portal strategy, so customers that deploy
applications globally may end up with different interfaces and logins.

SFR

SFR (which originally stood for Société Française du Radiotelephone) is currently
awaiting approval from current owner Vivendi to be sold to the cable subsidiary Numericable,
of Luxembourg-based Altice. SFR, which built its wireless network in close cooperation
with joint venture partner Vodafone, is one of the four large operators active in
the French market and is an investor in the French cloud startup Numergy.

Strengths

SFR's extensive data center footprint in France (also used to deliver its own IP-TV
services), combined with its communications and call center capabilities, continues
to form an attractive proposition for reaching French consumers with high bandwidth
and low latency.

The vendor offers a range of hosted messaging and unified communications solutions,
and delivers its cloud services through its investment interest in partner Numergy,
which is a joint venture with Bull and the French government.

Cautions

The continued transition of ownership, the discussions regarding merging or competing
with other French (network) providers, and a lack of clarity regarding the role of
SFR and its investment in Numergy in providing cloud based services may impact SFR's
focus on its hosting proposition.

SFR operates exclusively in France, and thus is mainly of interest to companies wanting
to host in that market. However, these companies need to be aware that the vendor
may launch competitive (media or other) offerings.

SFR's sales team was traditionally predominantly focused on selling communications
services. The impact of merging with Numericable, which has no history in supporting
complex enterprise sales, on overall sales capabilities is not yet clear.

Sungard Availability Services

Sungard Availability Services is a large IT availability and business continuity provider
with data centers in North America and in multiple locations in Europe. The vendor
offers cloud-enabled managed hosting on a VMware-based platform, and can also provide
data center colocation services as well as traditional managed hosting. Sungard Availability
Services can support customers in English and in additional languages via third-party
partners, and can provide managed services for Linux, Windows, Solaris, HP-UX and
AIX OSs (although Solaris, HP-UX and AIX support exists outside of the vendor's cloud-enabled
managed hosting offering).

Strengths

Sungard Availability Services has a well-established track record in helping customers
address complex disaster recovery and business continuity needs across a wide spectrum
of technology platforms, including a Recovery-As-A-Service product offering with SLA-backed
recovery time objective and recovery point objective metrics.

The vendor has a broad geographic footprint in the U.K., Ireland and Sweden, for clients
whose workload requirements may call for a presence in many locations.

With the launch of Sungard Availability Services Enterprise Cloud Services, the vendor
has been able to bring a true on-demand IaaS offering to market.

Cautions

The vendor's managed cloud platform utilizes a mediated provisioning process, whereby
its engineers must review and approve requests for new compute instances — leading
to provisioning times that may take between two hours and a day, depending on when
a change request is submitted and its complexity.

Sungard's services are spread across multiple portals, and can vary by geography,
leaving customers having to manage multiple login credentials based on service line
and geography, and lacking a unified global view of deployed infrastructure assets.

The vendor has been improving its customer service levels in recent years, but customer
satisfaction is still somewhat inconsistent and pricing is considered high, compared
with competitors in the market.

Sungard Availability Services' European presence is limited to Northern Europe, with
no support for Germany, Europe's largest market. This puts the vendor at a disadvantage
compared with other Pan-European hosting providers.

Telefonica

Telefonica, one of Europe's largest telecom conglomerates, takes its cloud-enabled
managed hosting offerings to the international market through the Telefonica Global
Solutions division, but also operates under local brands, such as O2 in the U.K. and
Telefonica in Spain. It recently moved the go-to-market operations of its Telefonica
Digital initiative back under the local country organizations of Spain, Germany and
the U.K.

Strengths

Telefonica has traditionally had a strong hosting position in its home market of Spain,
and in Latin America and Germany. It is building out its position in the U.K. under
the O2 brand, and through the acquisition and full ownership of the IT service joint
venture it had with the former 2e2.

Cloud computing has been a focus at Telefonica from early on. This can be seen through
early activities with partners, such as Joyent in the area of IaaS, and through consumer
storage and enterprise application offerings. Telefonica's Instant Servers, as well
as the VMware-based Virtual Data Center product, are cloud IaaS offerings incorporated
into its managed hosting product. Aligned to the Unica reference model of virtualized
architecture, Telefonica is creating economies of scope by deploying the same infrastructure
to service SMBs, enterprises and internal capacity needs for its (increasingly software-defined)
networking workloads from a single pool of capacity.

Cautions

Telefonica is rightfully pursuing cloud synergies between its communications and IT
offerings, but customers looking only for IT hosting capabilities may find this a
distraction.

The Unica approach is more advanced than that of other hosting and even of other cloud
and telecom providers, but whether Telefonica will be able to integrate the technologies
it needs for this offering remains unproven.

Telefonica has organized itself more aggressively to leverage the opportunities of
cloud computing than its competitors have. It is still not known whether this will
lead to faster progress in making the transition in certain geographies.

While ownership of its own network can strengthen Telefonica's Pan-European hosting
proposition, as a communications service provider, the vendor is also impacted by
the industrywide decline in fixed data and voice revenue, for which its significantly
growing IT service revenue may not be able to compensate.

Verizon

Verizon is a large global telecommunications service provider that operates data centers
in North America, as well as in Europe, the Asia/Pacific region and Latin America.
The vendor offers cloud-enabled managed hosting on a VMware-based platform, and can
also provide data center colocation services and traditional managed hosting. Verizon
can support customers in English, Dutch, Spanish and Portuguese (although not all
languages are available for all services), and can provide managed services for Linux,
Windows and Solaris OSs.

Strengths

Verizon's additional lines of business — namely, its telecommunications business,
managed security services and enterprise application outsourcing — allow the vendor
to build comprehensive solution sets for customers looking for a more complete outsourcing
model than just hosting.

Verizon's Enterprise Cloud Managed Edition offers customers the ability to provision
dedicated physical servers as well as virtual servers, with billing available in daily
increments.

Cautions

Verizon's development and full rollout of a new cloud platform have taken longer than
expected, impacting investment levels in its current offerings and leaving it further
behind some competitors in the market.

The vendor's services are spread across multiple portals, and can vary by geography
— leaving customers having to manage multiple login credentials based on service line
and geography, and lacking a unified global view of deployed infrastructure assets.

Verizon caters to multinationals as well as large national enterprises, In Europe,
Verizon sells its managed hosting services through its international sales force;
although these multinationals can build on the relationships established around the
communications and network services that Verizon delivers, multinationals have less
of a heritage in managed hosting.

Despite providing managed hosting for some large customers in European and other industries,
the vendor continues to focus more on being a networking player than a hosting or
managed services provider.

Vodafone

Vodafone is a global telecom company providing a wide range of mobile, managed voice,
data, hosting and IP-based network services and applications. Its data centers are
currently based solely in the U.K., Ireland, Turkey, New Zealand and South Africa.
With Vodafone's share of the approximately $130 billion Verizon Wireless sale, plans
are in place to expand services globally and into mainland Europe.

Strengths

Vodafone's combination of colocation, managed hosting and cloud offerings is especially
attractive to customers already using its communications and network offerings.

Vodafone has aggressive plans to grow its sales force, expand its geographic footprint
in the broader European market and further develop its software-defined network services
to attend to its enterprise customers.

Cautions

Gartner clients indicate that Vodafone can sometimes be slow in responding, with requests
taking a long time to go through the internal system or department structure, although
investment in this area could potentially address this.

Vodafone's core capabilities are around communications services, leaving the managed
hosting arm as a separate business unit. There is potential for the vendor to lose
its focus on managed hosting in order to concentrate on the higher-revenue business,
as has been seen with other acquisitions of communications companies.

Vodafone's general enterprise sales force has little experience selling managed hosting
to the enterprise customer, so will require comprehensive support and training.

Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as
markets change. As a result of these adjustments, the mix of vendors in any Magic
Quadrant or MarketScope may change over time. A vendor's appearance in a Magic Quadrant
or MarketScope one year and not the next does not necessarily indicate that we have
changed our opinion of that vendor. It may be a reflection of a change in the market
and, therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added

Telefonica

Savvis rebranded as CenturyLink

Dropped

LeaseWeb, a successful provider with a value proposition primarily focused on a different
segment of the market, compared to the one discussed in this Magic Quadrant

Inclusion and Exclusion Criteria

The inclusion criteria are used to determine which vendors will be covered in this
research. Included vendors must meet the following criteria:

The provider must sell cloud-enabled managed hosting as a stand-alone service, with
no requirements to bundle it with application development, application maintenance,
or other IT outsourcing and/or data center outsourcing.

The provider's qualifying offering must allow customers direct or mediated self-service
for OS instance provisioning on a CESI platform, with usage-based billing and resource-metering
increments, as well as OS management services that are co-terminus with the underlying
compute resources.

The service evaluated must be enterprise-class, offering 24/7 customer support (including
phone support) and must all have infrastructure availability SLAs.

The provider must have a geographic footprint within Western Europe with enterprise-class
data centers suitable for large-scale managed hosting.

The provider must be positively positioned in the cloud-enabled managed hosting market
based on Gartner-estimated market share.

Products and Services Excluded From This Evaluation

This Magic Quadrant is for cloud-enabled managed hosting only. That means the following
adjacent services are explicitly excluded from evaluation:

Colocation: Although many cloud-enabled managed hosting providers also offer colocation, the
quality of colocation offerings is not evaluated in this Magic Quadrant. This Magic
Quadrant should not be used to select colocation vendors.

Self-managed cloud IaaS: Many businesses want a self-provisioned, self-managed dynamically provisioned infrastructure;
they want to take advantage of the cost-efficiencies of a provider's scale and automation
tools, but do not want to relinquish control. If your interest is primarily in self-managed
cloud infrastructure, see "Magic Quadrant for Cloud Infrastructure as a Service."

DCO and remote infrastructure management (RIM): Although many DCO providers may manage the infrastructure for Web applications as
part of a DCO contract, this Magic Quadrant evaluates only managed hosting that is
sold as a stand-alone service within provider-owned data center facilities. It explicitly
excludes hosting that may be part of a more general DCO or RIM contract. DCO providers
are covered by "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, North
America," "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, Europe," and "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, Asia/Pacific."

Application management services: While some managed hosting providers may have some expertise in understanding how
best to run the infrastructure underlying specific applications, we consider managed
hosting services to stop below the application layer. Application layer services are
part of the application management market; see "Magic Quadrant for Oracle Application Management Service Providers, Worldwide" and "Magic Quadrant for SAP Application Management Service Providers, Worldwide."

Cloud management platforms: Cloud-building hardware and software — software such as BMC Cloud Lifecycle Management,
Citrix CloudPlatform and OpenStack, and integrated solutions such as HP CloudSystem
Matrix — are not evaluated in this Magic Quadrant, which is restricted solely to services.
Instead, see "Cloud Management Platform Vendor Landscape."

Vendors Considered, but Not Included

For this Magic Quadrant we evaluated a significant number of managed hosting providers
operating within Europe, but were unable to include them all. Some did not qualify
for this Magic Quadrant on the basis of their market shares in Europe or because they
failed to meet other inclusion criteria.

Peer 1 Hosting, a U.S.-headquartered hosting provider with a Pan-U.S. and European network for managed
hosting, cloud and colocation

Host Europe, a Pan-European hosting service provider that focuses on SMBs

Orange Business Services, a global provider of managed hosting and DCO services

There are thousands of service providers around the world that offer managed hosting
services of some type, and hundreds that focus primarily on this market or derive
a significant amount of revenue from it. Many small providers can provide an excellent
level of service, so do not let a lack of inclusion in this Magic Quadrant deter you
from evaluating these providers, because we do not consider service quality when determining
inclusion. Insufficient revenue and geographic presence alone could disqualify otherwise
excellent providers.

Evaluation Criteria

Ability to Execute

The most heavily weighted criteria for a managed hoster's ability to execute are its
service offerings and service excellence, as reflected in customers' experiences with
sales, support and operations. Overall business viability, as reflected in the provider's
ability to serve a customer successfully over a three-year period without significant
disruption, and the provider's track record, also contribute to this rating. Here,
Gartner emphasizes immediate capabilities for the use cases we see most often.

Table 1. Ability to Execute Evaluation Criteria

Evaluation Criteria

Weighting

Product or Service

High

Overall Viability

Medium

Sales Execution/Pricing

High

Market Responsiveness/Record

Medium

Marketing Execution

High

Customer Experience

High

Operations

Medium

Source: Gartner (July 2014)

Completeness of Vision

The market for managed hosting is evolving rapidly, so it is vital that service providers
have a vision for the future needs of customers and for how they will adapt their
offerings to meet those needs. The full context of a provider's vision is important,
as cloud computing continues to alter the market dramatically. We also evaluate a
provider's approach to growing its business, including its strategy for marketing
and sales, international expansion, and vertically focused market solutions.

Table 2. Completeness of Vision Evaluation Criteria

Evaluation Criteria

Weighting

Market Understanding

High

Marketing Strategy

High

Sales Strategy

High

Offering (Product) Strategy

Medium

Business Model

Low

Vertical/Industry Strategy

Medium

Innovation

Medium

Geographic Strategy

High

Source: Gartner (July 2014)

Quadrant Descriptions

Leaders

Leaders have proved they have staying power in this market, can frequently innovate
on their existing products and can be relied on for enterprise-class needs. They have
proved their technical competence and ability to deliver services to a wide range
of customers. They address multiple use cases with stand-alone or integrated solutions.

New managed hosting customers should sign two-year contracts with these companies,
whereas larger enterprise application hosting customers should aim for longer contracts
of three to five years. Satisfied customers renewing a contract with one of these
firms should sign a three-year deal. Cloud IaaS customers should buy these services
on demand when the pricing structure makes sense to do so, or in contracts lasting
one year or less.

Challengers

Challengers have a track record of delivering good service capabilities but are trailing
the market's evolution. They are typically companies that have solid traditional managed
hosting services, but have not exploited technology and market demand to build cloud
services.

New managed hosting customers should sign two-year contracts with these companies,
whereas larger enterprise application hosting customers should aim for longer contracts
of three to five years. Satisfied customers renewing a contract with one of these firms should sign a three-year
deal. Cloud IaaS customers should buy these services on demand when the pricing structure
makes sense to do so, or in contracts lasting one year or less; they should exercise
caution as these vendors are likely still proving their cloud services.

Visionaries

Visionaries have an innovative and disruptive approach to the market, but their services
may be new and unproven, and they frequently have limited service portfolios. Visionaries
have an early-mover advantage in providing cloud services, as well as road maps that
may turn them into Leaders in the future.

Because the business of Visionaries can change radically in a short period, we recommend
that customers buy these services from them on demand, or in contracts lasting one
year or less.

Niche Players

Niche Players are typically specialists with more focused product portfolios, or are
emerging vendors. They may serve one use case particularly well — better than a more
generalized vendor.

New and renewing customers of stable, narrowly focused Niche Players should sign two-
or three-year contracts. New and renewing customers of emerging Niche Players with
businesses that are still rapidly evolving should buy services on demand, or in contracts
lasting one year or less. If you are using managed services, be wary of making short-term,
tactical choices, as it can be inconvenient and expensive to change providers.

Context

Despite being in the media shadow of cloud computing, managed hosting is still an
appropriate solution for many organizations that want to outsource infrastructure
and routine IT operations tasks. Cloud is beginning to alter the traditional managed
hosting market, and is creating a new category of service — cloud-enabled managed
hosting.

Market Overview

Cloud-enabled managed hosting represents the evolution of the traditional managed
hosting market, as the influences of cloud IaaS begins to alter buyer behaviors and
expectations. As the hosting market shifts from the use of hardware dedicated to each
customer sold on multiyear contracts to the use of an underlying CESI, customers are
starting to bring cloudlike expectations to managed service offerings.

All Infrastructure Requires Management

The term "managed services" has traditionally referred to services that are performed
by humans, although those capabilities may have been augmented to some degree by automation.
Within the managed hosting market, these services have typically encompassed functions
such as:

Infrastructure monitoring, alerting and incident response

Management of server OS instances and (optionally) software at the middleware and
persistence layer, if in use — such as Web server software, application servers and
database servers

Applying hardware and software patches supplied by vendors, in order to maintain systems
in a preferred operational state

Management of storage services, including data backup and restore operations

Management of any network devices in use, such as firewalls, intrusion detection/prevention
systems, load balancers, and WAN optimizers

These services, coupled with dedicated computing hardware sold on multiyear service
contracts, have defined the managed hosting market for over 15 years.

During the past seven years, the cloud IaaS market has substantively altered the market
for outsourced computing capabilities by automating the traditional infrastructure
provisioning process and providing customers with self-service interfaces. Computing
capacity can be brought online in minutes in an IaaS environment; whereas in traditional
managed hosting, provisioning infrastructure is often a process that can take days
or even weeks.

Cloud-enabled managed hosting lives between these two markets, with automated provisioning
systems that can quickly provide computing capacity to customers — typically within
24 hours, but with the best systems having near-real-time provisioning. However, while
infrastructure provisioning has benefited from years of automation capabilities developed
for the IaaS market, the automation of managed services has traditionally lagged behind.
On average, cloud-enabled managed hosting represents around 10% of traditional hosting
revenue, although this figure can be higher in more-innovative organizations and is
growing at an exponential rate.

The evolution of cloud-enabled managed hosting will see the same transformation for
managed services that cloud IaaS saw for the provisioning of computing resources.
Over time, providers will begin to automate their processes to quickly provision managed
service capabilities for customers, and will allow them to subscribe to those services
in much shorter intervals — perhaps an hour or a month, but ultimately no longer than
the term commitment for the underlying computing resources. Self-service user interfaces
for all managed services supplied by a provider will be exposed in unified portals,
and utilized by both providers and customers cooperatively in managing an application
environment.

Through careful integration of agile automated services with structured operational
processes and strong technical staffing, successful service providers will be able
to amplify their abilities to manage customer environments via technology, rather
than the traditional approaches of scaling through staffing or via leveraging offshore
resources.

The Vendor Landscape Is Emergent

The market for cloud-enabled managed hosting is still in its early stages. While many
participants in the market have refined their service delivery processes in the traditional
managed hosting market over many years, much of this work still takes place behind
the scenes with — in some cases — nothing more than a service ticket request system
or a phone call as the lone interface for all of a customer's managed service needs.
Over time, managed services will become more tightly integrated directly into service
offerings, and will become more fully exposed to customers.

Furthermore, some providers have yet to connect their managed service capabilities
to their IaaS platforms, even though market demands for computing capacity are quickly
moving in the direction of cloud services. Eventually, IaaS will be the core offering
underpinning cloud-enabled managed hosting, especially once mainstream IaaS platforms
and leading providers can all provision bare-metal server capacity alongside virtual
servers — all via the same platform, and leveraging common portals and APIs.

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor for the defined market. This includes
current product/service capabilities, quality, feature sets, skills and so on, whether
offered natively or through OEM agreements/partnerships as defined in the market definition
and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financial health, the
financial and practical success of the business unit, and the likelihood that the
individual business unit will continue investing in the product, will continue offering
the product and will advance the state of the art within the organization's portfolio
of products.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports
them. This includes deal management, pricing and negotiation, presales support, and
the overall effectiveness of the sales channel.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the
organization's message to influence the market, promote the brand and business, increase
awareness of the products, and establish a positive identification with the product/brand
and organization in the minds of buyers. This "mind share" can be driven by a combination
of publicity, promotional initiatives, thought leadership, word of mouth and sales
activities.

Customer Experience: Relationships, products and services/programs that enable clients to be successful
with the products evaluated. Specifically, this includes the ways customers receive
technical support or account support. This can also include ancillary tools, customer
support programs (and the quality thereof), availability of user groups, service-level
agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factors include
the quality of the organizational structure, including skills, experiences, programs,
systems and other vehicles that enable the organization to operate effectively and
efficiently on an ongoing basis.

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those
into products and services. Vendors that show the highest degree of vision listen
to and understand buyers' wants and needs, and can shape or enhance those with their
added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization
and externalized through the website, advertising, customer programs and positioning
statements.

Sales Strategy: The strategy for selling products that uses the appropriate network of direct and
indirect sales, marketing, service, and communication affiliates that extend the scope
and depth of market reach, skills, expertise, technologies, services and the customer
base.

Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation,
functionality, methodology and feature sets as they map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying business proposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific
needs of individual market segments, including vertical markets.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific
needs of geographies outside the "home" or native geography, either directly or through
partners, channels and subsidiaries as appropriate for that geography and market.